(The Big Disrupt) Apple: Why Apple Are Scaling Back Their Driverless Car Plans

With the news of Apple joining Google in scaling back its driverless car plans and focusing on developing driverless car OS software, it's clear that the future of the driverless car won't be lead exclusively by Silicon Valley.     

Silicon Valley is littered with companies that considers its vision of the future before plain economics but when you have two of the most highly capitalized companies in the world take a step back as far as their self-driving car ambitions are concerned, it's quite clear the reality of how capital-intensive designing and manufacturing self-driving cars at scale has would be has hit home for Silicon Valley giants Google and now Apple. 

The only reason why Google and Apple are so interested in driverless cars in the first place has very little to do with changing the way we get around or making roads safer and more to do with expanding their already large and formidable ecosystems. However, it seems (wisely) that neither Google or Apple are willing to waste their considerable resources on designing and producing self-driving cars at scale to expand their ad inventory or head off increasing concerns about their dependence on iPhone sales. 

Add to that the legal, regulatory and even philosophical roadblocks that stand in the way of driverless cars seeing the light of day even if they're road ready at level 4 or 5 capacity in the next five to ten years is enough to give pause to any company managed by executives with their heads screwed on straight. However, what may have been the deciding factor in Apple limiting the scale of their driverless car plans is the muddy economics of making money from the final product. 

It could well take Apple years to make money on billions invested in R&D, acquisitions and political arm twisting in Washington and Brussels just to get a small fleet of driverless cars they would most likely would have subsidise at great cost. Apple would then have to reckon with the rarely addressed fact reflected in just about every car consumer poll that not everybody is dying to get from A to B in a car without a steering wheel or brake.  

Even automakers are realizing the economic viability of driverless cars are murky at best which is why Ford recently announced that they plan to have a driverless fleet ready by 2021 which would put it in direct competition with rideshare companies Lyft and Uber. However, such an announcement only highlights the questions surrounding the potential profitability of getting driverless cars to market. Both Uber and Lyft are losing money with Uber reported to have made an eye watering $3 billion loss last year. While much of Uber losses have been driven by the cost of paying human drivers a larger cut of fares collected from customers, it's still no guarantee Apple could see a return on what would be a sizeable investment.              

While Apple have pockets deep enough to eat large losses to expand their ecosystem, it's no surprise Apple are taking a step back as it would be cheaper to simply buy an automaker, most likely General Motors or Tesla, to mass produce driverless cars in the future. A big acquisition in the driverless car space looks almost inevitable as automakers don't have the cash or reach to take Apple or Google on directly and neither Google or Apple seem keen on becoming car manufacturers which is why automakers and tech companies have been partnering up left and right. 

What this all means is that we may have to wait a little for our first ride down the block in a driverless car.

(The Big Disrupt) Volkswagen: Volkswagen cheating is just the tip of the iceberg

Volkswagen cheating the EPA’s emission test might have sent shockwaves but it didn’t surprise or shock me that a billion dollar corporation cheated on a test for six years straight that would have cost them billions if they failed it. It should be common knowledge that a company as large as Volkswagen sole aim is to make returns on their significant investments and are liable to do whatever it takes to avoid or eliminate anything that impedes their simple if not narrow objective.

However, I grant you that if this was strictly true, Volkswagen executives and engineers it might have calculated that it would have been cheaper for them fail the emission test than cheat and deal with the mother of all nuclear fallouts if they got caught. Since they admitted they cheated, the company has lost a third of its value, drawn the ire of their customers, lost their CEO, opened themselves to a wrath of potential legal cases and fines, and suffered reputational damage that’s looking irreparable.

The thing that surprises me about the whole debacle is that Volkswagen knew that they would fail the diesel emissions tests without cheating, knew what would happen they got caught, were aware it might have been cheaper and whole lot less stressful to fail the test but decided to cheat anyway.

However, what also concerns me is not that they were prepared to roll the dice and pay the price to avoid failing the diesel emissions test, it’s the fact that they knew that their cars are more harmful to the environment (not to mention people) than they let on and were prepared to sell 11m polluting diesel cars around the world just to make their numbers.

Volkswagen could face billions in fines and a criminal investigation in the US alone, a wrath of lawsuits from VW customers across Europe (Europe represents diesel’s biggest market) who fell hook, line, and sinker for the “clean diesel” phenomenon, and even repercussions in Germany as according to Alexander Dobrindt, Germany’s Transport Minister, “ the carmaker had manipulated test results for about 2.8 million vehicles in the country”[1]. The company said that it will set aside $7.3 billion for fines and but with scale of the scandal expanding at every turn, it look like they’re going to need more than that to say the least.

In sum, Volkswagen will have hell to pay as VW’s emissions test scandal is only getting started as it’s quite clear that they aren’t the only carmakers trying to deceive regulators and customers.

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[1] A. Cremer, 2015, Volkswagen Picks company veteran to tackle emissions crisis, http://uk.reuters.com/article/2015/09/25/uk-usa-volkswagen-idUKKCN0RM08920150925

(Movies) Furious 7 Official IMAX Trailer (2015) - Vin Diesel, Paul Walker Movie HD

Check out this great IMAX trailer for the latest installment of the Fast and Furious franchise “furious 7” starring Vin Diesel and the late Paul Walker (RIP).

(The Big Disrupt) Tesla Motors: The Empire Strikes Back... Again

Tesla Motors has many obstacles in the way in making the electric car ubiquitous and actually selling them but auto dealers using their pull with state legislators is one obstacle they're not going to get around anytime soon. Auto dealers, dead set against Tesla Motors plans to sell their cars directly to customers, once again showed just how much clout they have at state level across the country as Michigan governor Rick Snyder signed off on a bill that prohibits carmakers, never mind Tesla, from selling their cars directly to consumers.

While Snyder maintained that the bill reflected existing law, it clearly was a signal that Tesla wasn't about disrupt the auto dealer system in Michigan or other companies in the home state of the big three. So far, Tesla Motors, like many innovative companies, has found itself outfoxed and out-muscled against entrenched interests with political connections that run deep but with the announcement that the company was going to build a $5bn in Nevada, it seems like electric car manufacturer is learning how to play the game.

Uber, who have made waves aggressively disrupting the taxi and private hire cab worldwide, has run into the same problem but with it's hiring of Obama former campaign manager David Plouffe, the car hailing outfit has realized that ushering a new product or service that renders old or existing models obsolete is a political  as well as technical feat.

While getting outmaneuvered by auto dealers in a number of states sucks, things haven't been all bad for the company as while competitors Daimler AG and Toyota sold their shares in the electric vehicle manufacturer, Daimler AG sold their shares out of fear of Tesla's Model S which could serve as stiff competition to the German carmakers luxury models.

However the real problem confronting is not auto dealers and state legislators but just how it can meet its demand or even if there is enough demand in the first place. So far, Tesla hasn't made much effort marketing or advertising it wares which makes the company's growth and profile in the media quite a feat. Analyst have pointed out this lack of push might hurt its demand but Tesla Motors CEO Elon Musk has wisely fixed his focus on making sure they can produce enough cars to meet demand rather than get into the tough spot of stoking up demand for their cars and not having the machine in place to meet it. 

In sum, it sucks that Tesla is getting outmaneuvered by  auto dealers fighting to stay in business in the long run, the company looks like its in a good place as it has a great product and as soon they figure out how to make their cars cheaper, Tesla, and more importantly, the electric car, will finally get its due.